Tag Archives: advertising

Revenue Streams Online (2) – Affiliate Marketing

Affiliate marketing; boiled down to its essence is the process of trading eyeballs for sales on other people’s sites.  It’s not always sales – sometimes you get paid for an action (signing up to a newsletter, visiting a certain page, etc.) but it’s mostly about sales.   It’s also one of the more popular revenue streams available, so let’s do the Pros and Cons.

Pros

  • Low cost of entry. All you need is a website to start.  Once you generate the traffic, you can get the links for the various affiliate sites to develop your sales.
  • No inventory or customer service hassles
  • Can be an extremely passive form of income – once the website is up, the processing of sales/etc is left up to the affiliated company, not yours
  • Easy to enter / work with  multiple websites with multiple industries, allowing you to experiment with profitability
  • Can be mixed with other revenue streams like advertising very easily

Cons

  • Extremely competitive marketplace partly due to the low cost of entry
  • Can take a long time to develop sufficient traffic to generate decent revenue.  As you are sending traffic away, you get approximately 50% of all visitors at best to the affiliated site.  Those then convert at between 1-3%; so traffic must be significant.
  • You are dependent on 3rd party sites, for both payments as well as the processing of the orders and overall conversion rates / usability of other sites
  • As majority traffic is often generated directly from search engines / referrals (especially for smaller sized sites); you are most liable to Google algorithm changes

 

Sex Sells – Sort Of

Let’s talk about sex. Let’s talk about all the ways it gets used.    Let’s do some myth-busting.

Myth 1 : Sex Sells

Sort of.  Like everything in marketing, it’s about your target market, your product and context.  Remember, the medium is the message!

Example 1 – You work for FHM.  You target young heterosexual males.  Your goal is to sell more magazines.  Do you use a picture of a pretty young woman in a provacotive pose?

Answer: Yes – your target audience are teenagers / young adults who are dealing with more testosterone than they ever have.  This is exactly the kind of target market where ‘sex’ sells.

Example 2 – You are a funeral director.  Do you use a picture of a scantily clad, pretty young woman at a grave?

AnswerNo.  Wrong context.  Unless you are purposely going for a contentious advertising campaign, this is the wrong market.

Myth 2: People recall ‘Sexy’ Advertising Better.

Again, sort-of.  Research indicates that recall of the advertisement is higher.  However, recall of the actual brand is significantly lower!

So, your advertisement will do well on the recall level, but it’s much; much less effective on a brand building level.   Add that to the fact that multiple exposures to an advertisement is required before an effect is taken (i.e. recall levels appear; numbers quoted range from a minimum of 3 exposures up to 13!); you are reducing the effectiveness of your overall campaign.

Myth 3:  Sexy Advertising Breaks Through the Clutter

Again, not entirely true.  If everyone in your industry is using sex as their persuasion method, then the clutter is ‘sex’.  You’d do better to choose another form of persuasion and tone – humour, anger / sadness / other emotions, information dumps, etc.

Dove’s use of ‘real women’ in their advertising won them major points and saw a significant increase in their sales for a while (till they got caught out!).  No sex, just taking a different tone and form of persuasion.

Myth 4: People Who Don’t Like Your Sexy Advertisements Aren’t Your Customers Anyway

Again, sort of.  Context and format makes a big difference.  Would advertising ‘Save Your Ta-Ta’s’ sound good to you for breast cancer fundraising? If it did, you just angered breast cancer survivors and older women – part of your target market.

Sure, specific targetting can reduce the affect by a significant margin – especially if your target market is narrow.  However, with a broader target market; you risk alienating a portion of your market.  Depending on the target market, you might be alienating a significant portion.

Myth 5: Sexy Advertising Brings Revenue

Four words. Old Spice Body Spray.  On a pure recall perspective, it had everything – a memorable jingle, a hot sexy man, humour and great production values.  It was shared the world over, was parodied and copied by the masses.  What it didn’t do? Make a dent in their sales growth.

There are more factors than just advertising or sexy advertising that generates revenue.  A memorable ‘sexy’ advertisement that can be talked the world over still might not bring revenue.

Conclusion

I am not saying don’t use sexy advertising.  It obviously works sometimes, and companies have generated large amounts of money through the use of that form of advertising.  However, be careful.  Always remember and check:

  • Target market
  • Product
  • Context (Tone & Medium)

Sex is an obvious tool.  It’s often the most obvious.  Don’t just reach for it for blindly, add to your toolbox.

Online Competition

If you are starting an online business now, you’ll realise that you aren’t gong to find it that easy to build traffic. Nevermind getting your message out there; you’ll also need to deal with competitors.  It’s easy and cheap to start up an online business; and the real costs don’t really start factoring in till later.

Need a website? Sure – pay $50 and you can host a website.  Oh? Your server is having issues? I guess you’ll need shared hosting.  We start at a small price of $100 a month…

Oh look, you need a credit card processor.  PayPal works right? Sure, if you don’t mind losing customers and 0.3 – 0.5% of each transaction.  Bah, that’s not much! Except it is when you are processing $50,000 a month.

And on, and on.  You can’t work out your garage anymore, you need a storage space.  You can’t just walk-in and drop the packages off, but Canada Post isn’t picking up from a storage lot so you need a warehouse.  Oh look, you need at least 1000 sq ft for a warehouse.

On the other hand, your competitors are starting up small.  They don’t have to worry about paying themselves a salary yet or the higher cost; so they can be lean machines.  There’s an inflection point there where it goes from a hobby to a business and some never pass it, but till they hit it they’re your competitors nibbling at your heels.

Remember, hold tight to what you know and what you are.  Build it right, it’ll get there eventually.

Designing Advertising – A Primer

So, you’re a small business and are looking to create your first advertisement.  Perhaps you are doing it in-house, perhaps you are hiring someone.  Either way, you should know the basics – otherwise, how do you evaluate what is provided to you is good?

The Medium is the Message

You probably have heard this before, and it’s worth remembering.  How you reach an audience (the medium) will dictate not just the design of your advertisement but its focus.  A print advertisement does not always translate well to internet advertising; nor does a TV advertisement translate to radio.

Decide on the medium used, then work on the advertisement.

The Design

A visually dominated advertisement

When working on the advertisement, decide which will dominate:

  • the copy
  • the visual

You can create an advertisement that has one or the other that dominates, but if both the visual and the copy dominate the advertisement, you war with your own design and nothing sticks.

Oh, I know the Oglivy often has both the copy and visual the same size, but it’s worth noting how few of those advertisements you see these days.  They just aren’t as popular because they aren’t as effective anymore.

The Appeal

A copy driven advertisement

Great.  You have a good design concept – now what? Well, now you need to decide on the appeal.

What appeal you use is really dependent on your audience and your medium.   If you don’t understand your audience (and where in their buying cycle you are targeting in that audience); you won’t understand what appeal will work.  Getting the appeal right is important.

The Follow Up

Great.  You have a design and an appeal, what else do you need? Well, a way for your customer to get more information is generally a good idea (the follow up).  Whether it’s as simple as your logo (doable if you have a LOT of brand recognition like Nike) or more detailed website and telephone numbers, you have to make sure your customer knows who created the advertisement and how to get more information.

This is when you start thinking as well as follow-through on other advertisements – do you have a design that flows from banner to website to print advertisement? You should have something linking it all together so that a customer seeing each separately with no context can say ‘oh, that’s X company’.  It can be as subtle as a swoosh or as detailed as specific logo colours and placement, but it needs to be there.

Lastly, start working on metrics – how to track the results of your advertisement.  If you aren’t thinking about this – then how do you know if what you did worked?

 

Social Marketing – the Next Big Thing

A long time ago in University, the Next Big Thing was the Internet.  Among the proclamations was that the Internet was going to render all other forms of advertising irrelevant.  The Internet was going to change everything in marketing.

I hear a lot of the same thing being said of social marketing these days, and I repeat what my Professor had to say to this ‘Hogwash’.

Yes, Social Marketing is important.  Yes, it has altered how we communicate.  Yes, it’s providing some great returns.  Sometimes.   However, it’s worth noting that it is a tool, and should be considered only one of a variety of tools at a marketers disposal.

Here’s an example.  In 2006; I worked for an e-commerce company that generated 80% of its revenue and leads from Search Engine Marketing.  It took me 6 months, but I finally convinced the CEO to allow me to do offline marketing.

We set up a new website and then  I took out a series of print advertisements in a magazine.  In 3 months, we had generated an ROI of 4.  In 12, our monthly ROI was 20.  3 years later, the company generates 50% of it’s revenue from offline advertising.

The fact is, your customers will have diverse viewing habits. Some might only do e-mail.  Others social websites.  Others, just skim the news and some favourite websites.  And even more might just not use the Internet at all except for work.

Your marketing plan must encompass all of these, or else you’ll just be fishing in the same spot repeatedly.  Sooner or late, that spot is going to go bare for new customers.

On Affiliate Programs

So. I just launched an affiliate program on 2nd tier affiliate network. Why 2nd tier? Mostly because a 1st tier network costs a lot of funds to set-up. Of course, the potential advantages are huge tool but dropping $10 – 15,000 on initial set-up is quite, quite expensive for a SME.

Pros of Affiliates

  • The Work is Out-Sourced
  • Initial cost of the marketing is borne by the affiliates
  • Potentially wide network reach
  • Individual affiliates can have multiple, older websites which can provide great link opportunities

Cons of Affiliates

  • No guarantee you’ll get any good affiliates
  • Initial setup cost can be relatively high; with low returns
  • On-going cost of good affiliates can be extremely high as % of sales
  • You lose control of your marketing

Short term vs long term

There’s always a push between short-term marketing and long-term marketing tactics that any company faces. Some short-term tactics can be very, very effective – but impact a company’s overall long-term growth.

A good pair of examples are spam and pop-up advertising. Both forms, in the short-term can be extremely effective at generating revenue in the short. However, in the long-term the company faces problems with their reputation and building trust.

On the other hand, many good long-term tactics require a lot of time to develop. SEO and word-of-mouth marketing are some of the most effective forms of marketing possible – but both require a large amount of time. In the meantime, you aren’t generating much revenue.

A good marketing plan takes into account both short-term and long-term tactics in development. Planned carefully, short-term tactics can be the foundation of your plan – like certain Pharmaceutical companies have shown.